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wins: rules for
The ) West Zonal Bench at Ahmedabad delivered a significant ruling, allowing to convert its from the to the . The Bench, comprising Judicial Member Somesh Arora and Technical Member Satendra Vikram Singh, held that the prescribed under Circular No. 36/2010-Cus. is , and cannot override the .
The Export Hurdle: COVID-19 and Domestic Procurement
Metalloys Recycling, a Mumbai-based Three-Star Export House with AEO-T2 certification, manufactures and exports high-grade non-ferrous metal products. It was granted an Advance Authorization License on , allowing duty-free import of 2,120 MT of raw material. Between , the company exported 30 consignments of brass and copper billets, declaring its intention to claim Advance Authorization benefits on the .
However, the COVID-19 pandemic severely disrupted global supply chains. Overseas suppliers could not fulfil orders due to container shortages and port closures. To meet its export commitments, Metalloys procured raw materials from the domestic Indian market, paying full GST. Customs records revealed that only 463.315 MT of the entitled 2,120 MT was actually imported. A Chartered Accountant's certificate confirmed that the exported goods were manufactured from duty-paid domestic inputs, quantifying the eligible Duty Drawback at ₹37,60,451.71.
The Commissioner's Rejection: Circular vs Statute
Seeking conversion of the 30
from Advance Authorization to Duty Drawback under Section 149 of the Customs Act, Metalloys approached the
. The Commissioner, however, rejected the request through an order dated
. The rejection was based on two grounds: first, that the company had
"declared at respective places in the Shipping bill that they intend to claim Advance Authorization benefits,"
equating this with actual availment of the benefit; and second, that the application was filed beyond the three-month period prescribed by
Circular No. 36/2010-Cus. The Commissioner also dismissed the COVID-19 justification as "not convincing," noting that Metalloys had continued exporting and that the
had extended the Authorization.
Judicial Precedent Prevails: The Mahalaxmi Rubtech Effect
The Tribunal firmly rejected the Commissioner's reasoning. It noted that the legal position relied upon by the Revenue—from
and
—
"is no longer holds good as same having been overruled in Union of India Vs. Mahalaxmi Rubtech Ltd."
In Mahalaxmi Rubtech, the
dismissed the Revenue's
, affirming that the three-month limitation under Circular No. 36/2010-Cus. is
Section 149 of the Customs Act.
The Bench further relied on the 's decision in , which held that when Section 149 does not prescribe a time limit, the Board cannot create one through a circular. The 's ruling in and 's own decision in also supported the conclusion that cannot be denied merely because of a limitation in an .
Notification 11/2022:
The Department also raised the applicability of
dated
, which prescribes a time limit for
in certain cases. The Tribunal clarified that this notification
"cannot be applied retrospectively to the exports made by the appellant between
. Accordingly, we hold that the notification has no application to the facts of the present case."
Key Observations
The Tribunal made several pivotal observations:
"Once the export has taken place, the
cannot be denied merely on the ground of limitation prescribed under the said Circular."
"The said legal position is no longer holds good as same having been overruled in
."
"The said notification cannot be applied retrospectively to the exports made by the appellant between
."
Final Verdict: Cannot Be Denied
In its final decision, the Tribunal concluded:
"In view of the foregoing discussion, we find that, in the facts and circumstances of the present case and in light of the legal position prevailing at the time of export, the export benefit cannot be denied to the appellant and is liable to be extended. Accordingly, the appeal deserves to be allowed."
The appeal was allowed in open court on . The ruling reinforces the primacy of statutory provisions over executive circulars and provides clarity for exporters seeking of , even when the three-month window has lapsed.
